What is a Consumer Proposal?
A consumer proposal is a legally binding arrangement filed with a Licensed Insolvency Trustee to settle your debts for less than you owe. You negotiate a debt repayment plan with your creditors over a period of up to 5 years in exchange for which you keep your assets.
When you file a debt proposal through an LIT, acting as a consumer proposal administrator, you immediately receive legal protection from your creditors under the Bankruptcy and Insolvency Act.
As a proactive solution, a consumer proposal will:
- Reduce your debts by up to 70%
- Consolidate your debts into one, affordable, monthly payment
- Freeze interest on your debts
- Stop collection calls and wage garnishments
Will I qualify for a Consumer Proposal?
The best way to determine if a consumer proposal is the right path forward for you is to have a free confidential consultation with a Licensed Insolvency Trustee.
As a federally regulated program, proposals have specific requirements you must meet. To be eligible to file a consumer proposal in Ontario:
- You must be able to afford to pay a portion of your debts
- Your debts must be greater than the value of what you own
- Your unsecured debt must not exceed $250,000 (not including your mortgage)
- You must be able to make monthly payments, or one lump sum payment
Most unsecured debts can be eliminated by a consumer proposal.
Who should file a consumer proposal? A consumer credit proposal is considered the #1 alternative to filing bankruptcy. A debt proposal makes sense if:
- You need relief from unsecured debts
- You have assets you wish to keep that would be surrendered in a bankruptcy
- Your income is high enough that you would be required to make high monthly surplus income payments if you declared bankruptcy
- You have an honest desire to repay as much as you can afford
- You want to avoid bankruptcy
- You work in a profession that requires you to disclose if you have gone bankrupt.
What does a Consumer Proposal cost?
If you have more debt than you can handle, a consumer proposal is usually the lowest cost debt relief option.
Even if you qualify for a debt consolidation loan, you will be repaying all your debts, in full, plus interest. In a debt management plan, you still must repay the full amount of the debt you owe.
A consumer proposal allows you to settle your debt for less than you owe. Your payments are based on a negotiation between what your creditors expect to receive and what you can afford to repay. In most cases, this results in a payment that is much lower than any other debt relief solution.
To compare possible payments in a consumer proposal with other options, try our consumer proposal calculator.
Contact us for a free estimate of what your consumer proposal payments might be based on your individual debts and financial situation.
Where do I get a Consumer Proposal?
In Canada, a consumer proposal can only be filed with a Licensed Insolvency Trustee.
Credit counsellors and unlicensed debt consultants cannot legally provide consumer proposal services. All they can do is refer you to a trustee licensed by the federal government like Hoyes, Michalos. You do not need a referral to an LIT (formerly called a bankruptcy trustee) and you should never have to pay an outside consultant to help you prepare any paperwork.
As a Licensed Insolvency Trustee, Hoyes Michalos is licensed to file consumer proposals in Ontario.
- All consultations with our licensed experts are free.
- We will meet with you as often as you need.
- We’ll find a solution you can afford.
- We have a 99% acceptance rate for consumer proposals we file.
Ready to talk to us about your options?Book a free consultation today